Roles and Responsibilities of Forensic Auditor

If there’s a case in a court concerning funds/money, for an evidence to be found, a forensic auditor is called to carry out the investigation.

Well, from this, you might be now having a clue about what a forensic audit is all about. Lucky for you, you won’t have to strain your brain for here is the meaning.

A forensic audit/forensic accounting is an examination carried out on a particular individual’s or organization’s financial statements/information to act as evidence regarding a case of fraud.

Here is the role of the forensic auditor:

1- Investigation

The investigation is carried out focusing the suspicion of the client. If a client suspects there might be some fraud going on in his company on the materials supplied for example. The forensic auditor goes ahead to find out:

What type of fraud is being carried out (if there’s any) ?

The time the fraud has been taking place

How the fraud was concealed, and the people involved in it

The impact of the fraud on the company

2- Evidence

This is the critical part of the investigation since it is the main reason for the auditing to be carried out. The forensic auditor is expected at the end out of the audit to present full evidence showing the type of fraud that was carried out, the effect of the fraud to the company and also the people involved in the fraud.

Here are the techniques used to gather evidence.

Substantive Procedure

This is where the auditor reviews the entire documentation o the company concerning the area of investigation to find out if there are any material statements which are not accurate, the validity of the materials and review on the accuracy of the financial records.

Analytical Procedure

This helps the auditor to understand the client’s businesses and changes in the business. He uses this to compare the different periods of time on the expenditure/budget of the company for example.

Software Programs

The forensic auditors have their own software programs that are able to detect any fraud that might have been carried out using technological devices like computers.

Internal Controls

The forensic auditor takes time to understand and test all the internal control system in order to find out if there are any holes in the system that would have allowed the fraud t take place.

Interview

The forensic auditor interviews the suspect(s) to try to get additional information about the fraud.

3- Report

At the end of the audit, the auditor makes a report regarding the fraud to the client.

The report should include:

Findings of the report

Evidence summary

Information on how the fraud was carried out

Recommendations on how the fraud can be avoided from occurring in the future

The report is the one that the client uses as evidence in the court if he decides to file a case.

4- Court

During the court proceeding, the auditor must be present in order to explain how he collected the evidence and also how he identified the suspect(s).

The auditor should explain all the process using simple terms (this is for people who don’t understand the accounting terms).

That being said, it is true that a forensic auditor plays a very big role but he does not work alone. In order to get to hire a forensic auditor, you must decide on which the forensic accounting firm to contact.

Best Forensic Accounting Firms

here are some of the Best Forensic Accounting Firms (with their addresses)

These firms have been rated as the best in 2018 because if their awesome forensic accounting services.

Now that you know all that, forensic auditing has another importance apart from providing evidence in a case.

Importance of Forensic Auditing/Accounting in an Organization

Some Importance of Forensic Accounting in an Organization are:

1. Loss

Frauds make an organization experience huge losses, but with the help of forensic auditor, an organization is able to know the kind of fraud that has been going on and how to curb it reducing the organization’s losses.

2. Efficiency

Forensic accounting helps in enhancing the efficiency of an organization by giving recommendations on how the current financial processes and standards can be upgraded and be safer

3. Finance Management

Forensic auditor acts as a third eye in checking the financial statements making sure the funds were used solely for the organization’s purposes and not personal.

4. Exploitation Risk

The forensic accountant helps in identifying any loopholes in organizations processes and gives recommendations on how the client can seal the loopholes.

In doing this, exploitation risks are reduced since all the loopholes are sealed.

In order to keep track of your financial statements and to make sure you don’t unnecessary losses, you need a forensic auditor by your side.